Report: Bet365 considering sale

Bet365 Considers Historic M&A Opportunities

Gambling titan Bet365 is reportedly exploring one of the most significant mergers and acquisitions (M&A) in the industry’s history, potentially valuing the company at £9 billion for the Coates family.

This information comes from a recent report by The Guardian, indicating that informal internal discussions have taken place regarding the future options for Bet365, which include a sale, an initial public offering (IPO), or a partial divestiture. The company’s valuation has been pegged at an impressive £9 billion.

Under the leadership of Denise Coates, Bet365 has recently engaged in discussions with U.S. advisors and Wall Street banks, signaling serious intent regarding its strategic options.

One pathway being considered is a partial sale to a private equity firm, enabling the Coates family to maintain ownership in some capacity. Another potential avenue is pursuing a listing on a U.S. stock exchange. iGB has reached out for comments from Bet365 regarding these developments.

Bet365’s Strategic Exit from China

Recent strategic decisions—including Bet365’s withdrawal from the Chinese sports betting market—have suggested that the company may be positioning itself for a major transaction. The operator’s exit from this market serves as an indication of its broader pivot toward regulated regions such as the United States and Brazil.

In China, gambling is severely restricted, with legal operations primarily limited to the special administrative regions of Macau and Hong Kong. Bet365 had faced scrutiny in this market but consistently maintained its stance of compliance with Chinese laws. In a statement to The Telegraph in 2020, a Bet365 representative declared, “There is no legislation which expressly prohibits the supply of remote gambling by offshore operators into China.”

Ed Birkin, Managing Director of H2 Gambling Capital, noted to iGB that various indicators suggest Bet365 is preparing for significant changes. He suggested that if speculation about a sale had arisen a year earlier, it would have been shocking; however, the company’s recent moves have brought the prospect of M&A to the forefront.

“Their exit from China seemed like a strategic housekeeping move for an imminent transition,” Birkin commented. “While one could interpret the China exit as merely a reaction to regulatory pressure, combined with their tactics surrounding sports investments, it hints at more substantial plans.”

Assessing the Feasibility of an IPO

Industry M&A advisors frequently discuss the prospect of an IPO for Bet365, yet there appears to be no compelling rationale for the Coates family to pursue this route. Transitioning from a private entity to a public company carries inherent challenges, notably the extensive disclosure obligations that can be burdensome for a business that has historically operated in the private sphere.

Some industry analysts suggest that DraftKings could emerge as a potential acquisition partner, though experts emphasize that both companies would need to align strategically for the deal to be beneficial. The suggested £9 billion valuation for Bet365 may, in fact, be conservative compared to its competitors; for instance, DraftKings currently boasts a market capitalization of approximately $16.64 billion.

Is Bet365 Losing Its Competitive Edge?

A recent filing with Companies House reveals that Bet365 reported group revenues of £3.72 billion ($4.65 billion) for the fiscal year ending March 31, 2024, marking a 9% increase over the previous year’s £3.41 billion. Notably, the company returned to profitability, posting a profit before tax of £626.6 million after a £12.4 million loss in 2023.

However, analysts at Regulus Partners have pointed out several challenges that might be hampering Bet365’s growth trajectory. These include intensified competition in in-play betting options and a decline in revenue from VIP and grey market sectors in mature European markets.

“Bet365 appears to have reached a plateau in in-play growth and has yet to identify another robust growth engine in an increasingly competitive landscape,” Regulus noted. “As a result, they risk losing market share at an alarming rate.”